For those interested in operating a small business or conducting individual professional activity in Bosnia and Herzegovina, this article provides an overview of the availability, requirements, and key tax conditions for sole proprietors in 2025.
Sole Proprietorship Status in Bosnia and Herzegovina
Bosnia and Herzegovina allows individuals to register as a samostalni poduzetnik (sole proprietor) or to carry out samostalna djelatnost (independent activity) without the need to create a distinct legal entity. This status is accessible and commonly chosen by local residents seeking a straightforward way to run a business and invoice clients directly in their own name.
Key Details for Sole Proprietorship Registration
- Available to regular citizens of Bosnia and Herzegovina
- Involves personal liability, as there is no separate legal entity
- Widely used for small businesses and individual service providers
Registration Procedure
Registration as a sole proprietor is handled at the municipal or cantonal level, depending on the specific entity within Bosnia and Herzegovina:
- Federation of BiH: Register through municipal offices
- Republika Srpska: Register through cantonal or city authorities
- Brčko District: Local registration process
Upon registration, sole proprietors must also register with the tax authority and obtain a tax identification number, setting the stage for tax and social security compliance.
Taxation of Sole Proprietors in Bosnia and Herzegovina (2025)
Income derived through a sole proprietorship is taxed as personal income, not corporate profit. Both the Federation of BiH and Republika Srpska apply a simple flat tax rate for this income.
| Entity | Personal Income Tax Rate (%) |
|---|---|
| Federation of BiH | 10% |
| Republika Srpska | 10% |
A sole proprietor is also required to make social security contributions, though specific rates are defined by the respective entities and should be verified at registration. The tax regime remains highly simplified relative to traditional corporate frameworks, which is especially advantageous for small business owners.
Accounting and Regime Simplification
For 2025, Bosnia and Herzegovina maintains simplified accounting and taxation procedures for small and micro businesses. However, it is important to note there is no equivalent to the French or Western European auto-entrepreneur regime with highly reduced tax obligations or ultra-streamlined reporting. All sole proprietors are subject to the core income tax rates above and regular reporting duties.
Overview Table: Sole Proprietorship Status & Conditions (2025)
| Aspect | Details |
|---|---|
| Status Name | Samostalni poduzetnik / Samostalna djelatnost |
| Legal Entity Required | No |
| Registration Level | Municipal or Cantonal (depending on entity) |
| Personal Income Tax Rate (Federation of BiH) | 10% |
| Personal Income Tax Rate (Republika Srpska) | 10% |
| Tax Authority Registration | Required |
| Tax Identification Number (TIN) | Required |
| Social Security Contributions | Required |
| Simplified Regime | Yes, but no special micro-entrepreneur regime |
Pro Tips for Registering as a Sole Proprietor in Bosnia and Herzegovina
- Research which entity (Federation of BiH, Republika Srpska, or Brčko District) your prospective business address falls under, as this determines exact registration steps and compliance requirements.
- Start the process at your municipality or canton’s business registration office; prepare personal identification and relevant forms in advance to streamline submission.
- Timely registration with the tax authority is essential—delays can result in administrative penalties and retroactive obligations.
- Take advantage of simplified accounting rules but keep clear, regular records to ensure compliance and ease of annual tax filings.
- If you are considering cross-border activities, consult the relevant official guidelines to determine VAT obligations and whether additional notification is necessary.
Links & Official Sources
- Federation of BiH Tax Authority
- Republika Srpska Government
- Federation of BiH Government
- Invest Srpska – Business Registration
Registering as a sole proprietor in Bosnia and Herzegovina offers a clear, practical route for individuals to operate independently, with a straightforward registration process and flat personal income tax rates of 10% across both main entities. While accounting is simplified and the business environment is accommodating for small operations, there is no separate micro-entrepreneur regime with further reduced obligations. Ensure you follow entity-specific rules, keep documentation in order, and plan for applicable social security contributions as you launch your activity in 2025.